All posts tagged baht

Puea Thai Party supporters celebrate an election victory at the Democracy Monument in Bangkok on July 3, 2011.

The Puea Thai Party won a solid majority in Sunday’s election in Thailand, and with Prime Minister Abhisit Vejjajiva conceding defeat, markets are hoping the result will bring some much-needed stability to the country. In the run-up to the election, investors dumped Thai shares, but according to some early indicators, sentiment is positive. The benchmark SET index is up more than 3% at Monday’s open, the baht is surging and spreads on Thai credit default swaps are tighter. Here’s a round-up of what the street is saying post-election.

The inflation-driven selloff in Asia spread in a rather precipitous way to Thailand on Monday, where investors drove the benchmark stock index 4.26% lower. As foreign investors fled Thai stocks and bonds, the baht sank against the dollar. The dollar rose 1.6% against the baht.

The cause: foreign investors sucking out some of that cash they funneled into Thailand in 2010, a market that rose 41% last year.

Indonesia, Philippines, and India, have seen substantial market pullbacks as price inflation sets in. Investors are worried central banks will be more aggressive than previously expected when it comes to raising interest rates. Higher rates slow down the economy, which hurts stocks. And investors holding bonds at current, lower interest rates, see the value of their assets drop.

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